Laws: Safeguard petitions a double-edged sword?

The Bush administration announced it was approving two more safeguard petitions against escalating textile imports from China while delaying decisions on four other cases until Oct. 1.

But critics charge the safeguard petitions, which are allowed under China’s WTO accession agreement, may actually benefit textile manufacturers in India more than what’s left of the U.S. textile and apparel-making sector.

Spokesmen for U.S. textile manufacturing organizations said they were disappointed that the Committee for the Implementation of Textile Agreements, a multi-agency group in Washington, failed once again to act on all the safeguard petitions, some filed last December.

“The case on wool trousers was brought Dec. 6, yet this is the third time the decision has been delayed,” said Karl Spilhaus, president of the National Textile Association. “U.S. imports from China in this critical category are up 198 percent. People are hurting and need the safeguards.”

The administration had pushed decisions on the petitions back to Aug. 31 when negotiators for the two countries met in Beijing. U.S. trade representatives have been trying to work out a long-term (three years) solution to Chinese imports, but failed to reach an agreement.

Textile industry leaders attending the negotiations called China’s demands unreasonable and urged the U.S. government to continue to adopt the stance that “no agreement is better than a bad agreement.”

While U.S. manufacturers may have a case against China’s unfair trade practices, including non-performing loans, currency manipulation and direct subsidies, others are saying their victory may be only symbolic.

The latter note that however just the cause, the safeguard petitions may hurt U.S. cotton producers — who sell more to China than India — more than they can help U.S. textile manufacturers.

“One can see the effect of the government’s (safeguard) action by reviewing the significant drop in New York futures when the announcement came from Washington,” said O.A. Cleveland, a retired Mississippi State University agricultural economist who now writes for the CottonExperts Web site.

“The market’s concern over this issue is increasing. A brief look at the past two months’ export sales and export shipment data indicates China has accounted for over one-half the export demand for U.S. cotton. Recall, too, some 60 to 70 percent of the cotton grown in the United States must move in the export market or be left stranded in the warehouse.”

China has stopped shipping some products to U.S. markets because of previously approved safeguard categories, but manufacturers in India and other Far East countries are increasing their market share dramatically, Cleveland notes.

Nobody is guessing when the safeguard petitions might start cutting into U.S. cotton shipments to China — it bought 88,600 bales or nearly half the U.S. exports sales the week of Aug. 25. But the safeguard provisions clearly carry a double-edged sword for the U.S. fiber sector.

Editor’s note: Our hearts and prayers are with our many friends in Louisiana and Mississippi and the New Orleans area who suffered losses from Hurricane Katrina.